On October 16, 2019, on the eve of a three-month jury trial and after 5-1/2 years of scorched earth litigation, the parties in this closely-watched antitrust class action announced a settlement in principle of $575 million and comprehensive injunctive relief, subject to approval by the Court.

On December 19, 2019, the UFCW & Employers Benefit Trust, on behalf of the certified class of California self-funded payors, and the People of the State of California, filed for preliminary approval of this historic settlement. The court ordered a new process to select the monitor who will oversee compliance with the injunctive relief, and set a further hearing on preliminary approval for March 9, 2021 to hear argument specifically on the selection process.

Cohen Milstein is one of five firms that litigated this case on behalf of a certified class of self-insured employers and union trust funds against Sutter Health, a dominant hospital chain in Northern California, for restraining hospital competition through anticompetitive contacting practices with insurance companies.

Case Background

The complaint, filed on April 7, 2014, alleges that since the early 2000s Sutter Health has used anticompetitive contract terms and contracting practices with the major health insurance companies in California to insulate itself from competition and to increase prices.  Sutter Health used the market power of certain “must have” providers to compel these insurance companies to include all Sutter Health hospitals, outpatient facilities, and physicians in their insurance products, even though several of those providers were more expensive than available alternatives.  Further, Sutter Health prohibited the insurance companies from giving incentives to patients that would steer them away from high-cost Sutter providers and from disclosing information about Sutter Health’s prices to self-funded payors or insured individuals. As a result, patients have had limited ability and little or no incentive to choose a high-quality competing provider based on price. This has enabled Sutter Health to charge substantially inflated prices.

The court denied Sutter Health’s motion to dismiss in April 2016 and certified the plaintiff class in August 2017.  California’s Attorney General joined the suit in March 2018.  Had the trial proceeded, Sutter Health would have faced potential single damages of hundreds of millions of dollars.

The case name is: UFCW & Employers Benefit Trust v. Sutter Health, et al., Case No. CSG 14-538451, Superior Court of the State of California, City and County of San Francisco.